Laxey calls truce on 3i ahead of AGM

Activist investor Laxey Partners has called a truce on 3i Group as it emerged
that Britain's biggest listed private equity firm is poised to cut its
head-office staff and slash its overseas office network.

Laxey, which owns almost 1pc of 3i, had submitted several resolutions ahead of the private equity investor's annual Annual General Meeting (AGM) this Friday. Laxey's resolutions requested that 3i be banned from making new investments, sell its existing investments and return the cash to shareholders.

The investor demanded the shake-up at 3i because the company's shares have underperformed significantly since the financial crisis of 2008, trading at between a 40pc and 20pc discount to net asset value.

Yesterday, however, a spokesman for Laxey said the fund "has abstained on its resolution" for the AGM, adding: "3i has come up with a scheme in response [to Laxey's resolutions], appointed Simon Borrows [as new the chief executive to replace Michael Queen] and will announce a strategic review".

It is understood Mr Borrows will unveil "very significant" job losses and a reduction in the company's 16 international offices as part of his new strategic plan.

3i has offices across the world – including Brazil, Finland and India – but Mr Borrows is expected to close many of them down, while others will take on a reduced role and be prevented from making any new investments.

Mr Borrows, a former investment banker, will also wield the axe closer to home, with up to 40pc of jobs under threat at the group's head office in London's Victoria.

3i was originally set up at the end of the war in 1945 as a government agency, the Industrial and Commercial Finance Corporation to help rebuild businesses, but was privatised in 1987.

Since then, 3i has grown significantly. The investment fund now manages almost £11bn and owns some of Britain's best-known companies, such as lingerie maker Agent Provocateur, womenswear retailer Hobbs and Bestinvest, a financial adviser for high net worth individuals.

Following the 2008 credit crunch, several of 3i's deals have turned sour. The group, for example, has had to write off its investment in Enterprise, the UK's biggest street-sweeping company.

* Chief financial officers of private equity-backed businesses are less optimistic about the growth in their company's revenue than they were a year ago, according to a survey by Deloitte, the business advisory firm.